In a potential attempt to compete with apps like Hotel Tonight, Priceline has launched a new Tonight-Only Dealshotel reservations service that is being bundled into its free Hotel & Rental Car Negotiator app for the iPhone and iPod Touch. The new service enables last-minute travelers to choose the exact hotels they want for stays the same night and still enjoy Priceline’s discounts.

“Usage trends show that approximately 70% of priceline.com’s mobile customers are booking hotels for same-day check-in, so there’s a clear market need for the Tonight-OnlyDeals service,” said John Caine, priceline.com’s senior vice president of marketing.

Tonight-Only Deals will be posted on the service at 11:00 a.m. local time and can be instantly booked up until 11:00 p.m. local time, or until they sell out.

The new service will show the names of all the available Tonight-Only Deals hotels with descriptions, maps and photos, along with the rates and the percentage discounts. Tonight-Only Deals also will display each hotel’s customer satisfaction score and reviews generated by priceline.com guests who have stayed there.

The concept seems easy. When a traveler searches the app’s published-price hotel listings for a same-night stay, the app will also look for Tonight-Only Deals and alert the traveler if specially discounted deals are available. The traveler will then see a list of up to three available hotel room reservations per city and will see which hotels have reservations available. Travelers can choose to see the Tonight-Only Deals or continue with their regular search.

The app is easy to use – we tested it for our home market (Washington, DC) and easily found three deals for hotels we’d definitely consider at an average discount of about 20%, usually somewhere between $20 and $50.

In contrast, Hotel Tonight, a similar app, showed significantly more area results (two in Arlington, three in DC, and three resorts within a few hour drive). The discounts here appeared to be greater, but the geographic concentration may have been less desirable, depending on what you were looking for.

At the moment, it just means that we’ll be checking both apps when we make sure we find the best possible hotel and the best deal.